Petroleum Project Economics & Risk Analysis

Course Objectives

        ·      Understanding various economic terms used in the oil & gas industry

        ·       Understanding how to develop economic models of various petroleum fiscal regimes

        ·       Carrying out cash flow analysis and determine economic indicators

        ·       Carrying out different economic analyses for petroleum related projects

        ·       Evaluating and quantify risks and uncertainties

        ·       Making the right investment decision in the presence of risk

        ·       Carrying out a comprehensive economic evaluation study for any petroleum related project including risk analysis and sensitivity study using spreadsheet

        ·       This course covers the fundamental aspects of upstream petroleum economics and risk analysis

        ·       This course will allow participants to construct computer-based economic models, incorporate relevant cash-flow data and draw conclusions to aid decision-making. It also provides practical guidance in the application of the techniques of the economic analysis currently used in the oil & gas industry.

       ·       Understanding economic indicators, risk and uncertainty, different economic structures such as tax regimes and production sharing contracts, enhances the quality and the value of economic analysis.

       ·       The course will include a number of exercises aimed at enhancing each participant capability to conduct various economic evaluations. In addition each participant will attempt to develop spreadsheet calculations of various economic analyses.

Who Should Attend? 

        ·       Engineers

        ·       Geologists

        ·       Accountants

        ·       Technicians who need to learn how to conduct economic evaluation and to understand the role of petroleum economics in investment decision making.

        ·       Supervisors & Managers in the Planning, Exploration, Production, Projects, Financing and Technical Departments in Oil & Gas Companies

Course Content

Day 1

Cash Flow Analysis

         ·       Familiarization with Economic terms.

         ·       Calculation of Capex, Opex and Revenue

         ·       Cash Flow Calculation

         ·       Petroleum Fiscal Regimes

         ·       Tax & Royalty Regime

         ·       Production Sharing Contracts (PSC)

         ·       Depreciation Methods

         ·       Nominal & Real Cash Flow

         ·       Sunk (Past Exploration)Costs

         ·       Project Financing

Day 2

Economic Indicators

         ·       Present Value & Discount Factor

         ·       Net Present Value

         ·       Internal Rate of Return

         ·       Effect of Project Delay

         ·       Payback Period

         ·       Maximum Exposure

         ·       Capital Productivity Index

         ·       Evaluating Incremental Projects

         ·       Comparing Indicators

Day 3

Risks and Uncertainties

         ·       Expected Monetary Value

         ·       Quantifying Risk and Uncertainty

         ·       Decision Tree Analysis

         ·       Added Value of Data acquisition

         ·       Farm-out Decision

         ·       Probability Analysis

         ·       Sensitivity Analysis

         ·       Spider and Tornado Diagrams

         ·       Probability Distribution

         ·       Monte Carlo Simulation

Day 4

Setting up Spreadsheet Calculation

         ·       Setting up an Integrated Economic Model of a Typical Oil Field Development Project including Sensitivity Analysis

Day 5

Setting up Oil Field Development Model

        ·       Workshop: Team Participation to Evaluate Different Project Economics Using the Model